GENEVA, Dec 6 (Reuters) - Six world powers are due to hold
their first talks with Iran in more than a year on Monday,
hoping the meeting will lead to new negotiations over a nuclear
programme the West believes is aimed at making atom bombs.

On the eve of the meeting in Geneva, Iran announced what it
called a major step forward in its nuclear work, signalling it
is not about to back down in a long-running battle over what it
insists are peaceful plans for energy production.

The six powers -- Britain, China, France, Germany, Russia
and the United States -- do not expect a major breakthrough
during the Dec 6-7 discussions. Diplomats say they would view as
a sign of progress an agreement to meet again for more
substantial talks, perhaps early next year.

Western powers want Iran to suspend uranium enrichment
activity, which can produce fuel for nuclear power reactors or
provide material for bombs if refined to a higher degree.

However, Iranian President Mahmoud Ahmadinejad has said this
key issue will not be discussed in Geneva.

Before the talks, U.S. National Security Council spokesman
Mike Hammer said Washington and its allies were looking to see
if Iran would enter into discussions "with the seriousness of
purpose required to begin to address international concerns with
its nuclear programme".

Asked upon his arrival in Geneva whether he was optimistic
about the meeting, Iranian nuclear negotiator Saeed Jalili said:
"Everything depends on the other party's attitude."

The West has tightened sanctions on Iran in recent months,
and Western diplomats say these are hurting Iran's oil-dependent
economy, which Tehran denies.

The United States has warned of more pressure and isolation
if Tehran continues its uranium enrichment activities.
Washington says all options, including military, remain on the
table and Iran's arch enemy Israel has also not ruled out a
military strike if diplomatic efforts fail.

On Sunday, Iran's nuclear energy chief Ali Akbar Salehi said
Iran would use domestically produced uranium concentrates, known
as yellowcake, for the first time at a key nuclear facility,
cutting reliance on imports of the ingredient for nuclear fuel.

The timing of the announcement appeared aimed at showing
Tehran's determination to pursue its nuclear plans before talks
with the powers, whose negotiating team will be headed by
European Union foreign policy chief Catherine Ashton.

Hammer said the announcement was not unexpected since Iran
has been trying to develop its own uranium programme for years.
But he said it called further into question Iran's intentions.

Salehi said Tehran would be taking part in the negotiations
"with strength and power" and insisted the talks were for the
benefit of the other countries, to allow them to find a way out
of the political deadlock they had created by pressuring Iran.

Last week's killing of an Iranian nuclear scientist in
Tehran, which Iran has blamed on Western intelligence services
keen to impede its nuclear advances, could cloud the atmosphere
for dialogue in Geneva.

Iran wants U.N. sanctions lifted, calling them illegal, and
has accused the U.N. nuclear watchdog in Vienna of sending spies
of foreign intelligence services to the country among
inspectors who regularly visit its nuclear facilities.